 Early Evidence on Balloon PerformanceGregor D MacDonald and Thomas M Holloway The Journal of Real Estate Finance and Economics, 1996, vol. 12, issue 3, 279-93 Abstract: Balloon loans have become increasingly popular in recent years. For this reason, it is important to understand their features, assess their potential risks, and monitor their early performance. This article focuses on these topics. The first section discusses balloon characteristics and mortgage choice. The second section discusses expected balloon performance. The third section provides an econometric model for monitoring current performance. The fourth and fifth sections describe the data and results, respectively. The final section summarizes the article and offers some concluding remarks. The fundamental conclusions are that (I) early balloon performance is slightly worse than expected (i.e., balloons are not matching fixed-rate performance prior to balloon reset dates); (2) balloon performance is, however, within the range expected over the full term of the loans (i.e., performance worse than fixed-rate performance, but better than ARM performance); and (3) balloons have important characteristics that help mitigate systematic risk. Copyright 1996 by Kluwer Academic Publishers Date: 1996 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:kap:jrefec:v:12:y:1996:i:3:p:279-93 Ordering information: This journal article can be ordered from Access Statistics for this article The Journal of Real Estate Finance and Economics is currently edited by Steven R. Grenadier, James B. Kau and C.F. Sirmans More articles in The Journal of Real Estate Finance and Economics from Springer |
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